Sterman v. Ziem

PULLEN, P. J.

This is an action for damages for an alleged conspiracy to defraud respondent Sterman of his interests in a certain partnership.

In 1930, Jack Sterman and Roy IT. Ziem formed a partnership known as Ziem-Sterman Upholstering Co., and continued as such copartners until September, 1933. At that time the partners made a voluntary assignment of their business and assets to M. J. Flavin, for the benefit of their creditors, which assignment was in the usual form and provided that after the payment of their partnership debts and liabilities, the surplus, if any, should be paid to the partners. The assignment also contained a memorandum that either party had the option of purchasing, within a specified time, the interest of the other for $2,500.

After the assignment to Flavin he paid the current bills, but permitted the former partners to carry on the business as a going concern. During this period Carrie J. Duffy loaned to Flavin the sum of $2,600 to be used as the working capital in the business and received from Flavin his promissory note therefor. Of this $2,600 so loaned, $2,000 belonged to Mrs. Duffy and $600 to a Mrs. Hushman, a relative of appellant Ziem. During the receivership Flavin repaid to Mrs. Duffy $1,000 on her loan and to Mrs. Hush-man $300 on her loan. In December, 1933, the creditors decided to liquidate the business and the same was sold to one J. IT. Ready. None of the consideration for this sale, however, was paid by Ready. The cash required, some $1400, was advanced by Mrs. Duffy and the balance of the consideration was a cancellation of certain notes, and a waiver of certain salary claims of Mrs. Ziem and Mrs. Sterman for services rendered to the Ziem-Sterman Upholstering Co., and while the bill of sale was from Flavin to Ready it was agreed between Ziem, Duffy and Sterman that Ready was to hold title to the assets so sold for the benefit of Ziem, Sterman and Duffy, and for their security.

It further appears in the evidence that although the business and assets were transferred to Ready, Ziem and

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Sterman had the physical possession and continued to carry on the business as they had previously done, without consulting either Mrs. Duffy or Ready in regard to any of the details thereof. Shortly after the bill of sale to Ready had been given, Ziem stated to Ready that Sterman, Duffy and himself were not satisfied with the business standing in the name of Ready, and after a conference between them, Ready, by agreement, transferred the business to Mrs. Duffy, receiving $3,300 therefor from Mrs. Duffy, of which she contributed $3,000 and Mrs. Hushman $300. At the time of the transfer from Ready to Mrs. Duffy she gave